Correlation Between Ford and Guardian Ultra
Can any of the company-specific risk be diversified away by investing in both Ford and Guardian Ultra at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Guardian Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Guardian Ultra Short Canadian, you can compare the effects of market volatilities on Ford and Guardian Ultra and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of Guardian Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Guardian Ultra.
Diversification Opportunities for Ford and Guardian Ultra
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Guardian is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Guardian Ultra Short Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Ultra Short and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with Guardian Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Ultra Short has no effect on the direction of Ford i.e., Ford and Guardian Ultra go up and down completely randomly.
Pair Corralation between Ford and Guardian Ultra
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Guardian Ultra. In addition to that, Ford is 104.98 times more volatile than Guardian Ultra Short Canadian. It trades about -0.18 of its total potential returns per unit of risk. Guardian Ultra Short Canadian is currently generating about 0.95 per unit of volatility. If you would invest 4,993 in Guardian Ultra Short Canadian on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Guardian Ultra Short Canadian or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Guardian Ultra Short Canadian
Performance |
| Timeline |
| Ford Motor |
| Guardian Ultra Short |
Ford and Guardian Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Guardian Ultra
The main advantage of trading using opposite Ford and Guardian Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Guardian Ultra can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Guardian Ultra will offset losses from the drop in Guardian Ultra's long position.The idea behind Ford Motor and Guardian Ultra Short Canadian pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Guardian Ultra vs. BetaPro SPTSX Capped | Guardian Ultra vs. BetaPro SPTSX 60 | Guardian Ultra vs. BetaPro SP 500 | Guardian Ultra vs. BetaPro NASDAQ 100 2x |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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